Misrepresentation, Non-Disclosure and Breach ... - Law Commission

Contents Page
1 Introduction and Terms of Reference 3
2 What are the primary changes to be introduced? 5
2.1 The current law and the approach taken by the Financial
Ombudsman Service 5
2.2 The Law Commission’s Proposed Reforms 7
3 Economic incentives in insurance markets 8
3.1 Comparing different remedies: an illustration 8
3.2 Conclusions 14
4 Baseline analysis of insurance markets and the extent of
non-disclosure 16
4.1 Market characteristics and coverage 16
4.2 Claims and non disclosure 21
4.3 Complaints to the Financial Ombudsman Service 22
4.4 Elasticity of Demand 27
4.5 Section Conclusion 30
5 Identification of the potential impact of the reforms 32
5.2 Information necessary to undertake a complete cost benefit
analysis 38
6 Case Study - Critical Illness Cover 40
6.1 Introduction 40
6.2 The effect of the proposals on non-disclosure and
misrepresentation 43
6.3 Summary Estimates 54
6.4 Conclusions 57
Annex 1 References 58
London Economics
June 2007 i